Consumers queue up to buy WebTV sets

Most Net devotees seem to think that the cross between the Internet and a television set is an unlikely pairing despite some of the positive aspects outlined here last week. They ask who wants to sit on the sofa and try to read a Web page from across the room? And the existing systems for entering Web page addresses (Universal Resource Locators or URLs) are difficult and time-consuming.

There are other problems too the special TV version of HTML (Hyper Text Mark-up Language), which translates the formatting of Web pages designed for a computer screen into something suitable for a TV screen, remains roughedged. However, these are all cosmetic problems which will be solved down the line.

Why? A couple of reasons. Unlike this time last year, there's already a market for set-top devices like WebTV. When WebTV was first released and then heavily promoted prior to Christmas 1996, consumers weren't convinced. Oh, the idea was kind of interesting, but very few people were buying the boxes, which retailed at $300 (£218) in the US.

That's because, despite its fast-growing success, the Internet was still not of general interest to the mass population in the US. Areas like Silicon Valley might have had modems in more than 70 per cent of homes a figure which still astonishes but most of the rest of the country did not find the Internet nearly as compelling.

However, this year, WebTV, since purchased by Microsoft for $425 million, is doing very well indeed. Two versions of the set-top box are now available, the Classic (yes, apparently a mere year of availability now qualifies an Internet product as a "classic") and WebTV Plus Network, which adds a TV tuner to the set-top box. In the US, the Classic goes for $99 while WebTV Plus could be had for $199 (with purchase rebates). On top of that, a WebTV user pays a monthly fee of $19.95 to access the Internet.

Over the recent holiday period, suppliers in the San Francisco Bay Area (home to Silicon Valley) could not keep up with the demand for WebTV. A survey of several major computer and appliance stores prior to Christmas revealed that none had a single WebTV product in stock and one of the larger stores noted that it had a three-week back order for WebTV. Some 250,000 boxes were sold by WebTV by the end of 1997 and they predict sales will hit one million devices by the end of 1998. Microsoft has also moved swiftly to find content partners for WebTV the companies who will offer special WebTV-only content, such as a Disney channel. MSN, Micosoft's own online service, has done poorly with content models so far, except in a few niches like travel or car sales, so it will be interesting to see what happens with WebTV.

There are several other makers of Web television devices, and they will either benefit from overall growth in this new sector or be forced out by the formidable strength of Microsoft. Perhaps Microsoft's investment convinced people that buying WebTV was a safe bet Bill Gates is usually fairly astute about where he invests. And who knows, maybe even he realised how difficult a time one can have getting on the Internet using his beloved PCs.